Making It Pay May Be Auto Infotainment’s Biggest Distraction

Designing advanced entertainment and telematics systems so they are safe to operate, meet regulatory benchmarks and work the way they are meant to are huge challenges for the auto industry, but an even bigger hurdle may be engineering a piece of the profits.

Safety, regulation, technological perfection.

Add “business model” to the list of things in need of ironing out before advanced telematics and infotainment can reach the ubiquitous stage. And it may take a truce of sorts between auto makers and cellular-service providers, the so called Telcos, to make it happen.

Karthikeyan Natarajan, head of Mahindra Satyam’s Integrated Engineering Solutions practice, paints a pretty promising picture of the connected car in the not-so-distant future.

It’s a world where movies are streamed to the cockpit via the Internet to entertain the kids; simple, intuitive voice commands control key accessories so drivers can keep their eyes on the road; and early alert technology automatically and quickly summons rescue workers to the scene of a life-threatening accident.

All this and more could be common within the next two to five years, Natarajan tells me. But there are hurdles, including the difficulty that comes with trying to keep up with the rapid rate of innovation in consumer electronics.

Auto makers “recognize this is something they must get into,” he says of advanced infotainment and telematics systems. “At the same time, (they will have to) continue to provide innovation at the pace of high-tech companies. That is going to be a little tricky.”

OEs and suppliers now are wrestling with systems aimed at 2014-2017 vehicles with an eye toward ensuring those devices are positioned to incorporate newer technology as it becomes available, Natarajan says.

“With voice (commands) coming into the picture, you want to make sure the customer is able to take advantage of that,” he says by way of one example. “Can I really start integrating those technologies into something I’m building up (now) so it will allow upgrades around what is likely to happen in the next five years?”

Then there’s the critical battle shaping up over who gets ownership of the customer inside the car and the serious uncertainty over how to make such systems and services pay.

For instance, it will be a challenge, Natarajan says, to convince car owners to spend money on accident-alert technology they hope they never will need to use.

And auto makers will be reluctant to invest in costly infotainment features that work seamlessly with cell phones and tablets, if gadget makers and cellular service providers are the only ones making a buck off their in-car use.

Why would OEMs spend $500 per vehicle to incorporate telematics features if there’s no revenue potential? Natarajan asks. “The point is to make money, right?”

He envisions a collaborative approach in which the Telcos begin to fold vehicle connectivity into their overall cellular-service plans and OEs make the up-front investment in vehicle technology in exchange for some control over subscription fees for in-car services from content suppliers. GM’s OnStar recently signaled it could move in this direction, unveiling a second-generation concept for the connected vehicle developed in partnership with Verizon.

Creating such a business “ecosystem,” where OEs, automotive suppliers, consumer-electronics makers, software developers and cellular-service providers all get a piece of the action is the next big leap in infotainment/telematics, Natarajan predicts.

“That is an innovation that is likely to happen. That’s what will really drive development.”